Every business is not always healthy. Seeing the signs of an unhealthy business are sometimes difficult for a small business owner. Some of the signs are listed below:
1. The primary sign that a company may be in trouble are poor financial reporting and lack of a strategic plan. Does your business keep large boxes stuffed with receipts, vendor invoices or other financial reporting source documents? If so, your business health is suffering and worse financial problems may lie ahead.
2. Another sign that a company may be in poor health is being dependent on borrowed funds and doing a poor job of financial forecasting. Of course, no business can be completely prepared for the future expenditures and sales that come up, not having any idea as to what could happen financially month to month is asking for trouble.
It doesn't matter how many years you have been in business, planning is not just required during the startup phase. You have to have a forseeable projection of where your company is going in the next 12 months. Unfortunately, 90% of businesses don't plan and don't have a 12 month budget. Managing a budget doesn't mean looking at what is in your bank account each week.
3. Another danger signal to potential problems is overburdened management. When management is overburdened, they tend to overlook the importance of keeping their financial records in shape or look at long term planning strategies.
As a small business owner, it is imperative to ask for help from an accountant in times such as these to keep their financial records stable and allow them to plan their company's future. It can require a lot of work from the client but it is time well spent to clean up records.
Copyright Jeanine Pfeiffer